TaxTMI 
TaxTMI 
TaxTMI 
2022 (11) TMI 179
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....course of hearing, the ld. AR submitted that the final assessment passed by the NFAC is not in accordance with the directions of DRP and that the modification order passed by the jurisdictional is not tenable. The ld AR prayed for the admission of additional grounds raised in this regard and submitted that if this issue is adjudicated, then the rest of grounds raised by the assessee with regard to the TP adjustment may be left open. 4. The additional grounds raised are pure legal issue, which does not require investigation of new facts. Hence, placing reliance on the judgment of the Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC), we admit the additional grounds. 5. The assessee is engaged in the business of trading in automobile components, operating turnkey projects and logistics, primarily catering to automotive industry. The assessee is a wholly owned subsidiary of Toyota Tsusho Corporation, Japan (AE). The assessee filed return of income for the AY 2017-18 on 28.11.2017 declaring NIL income. The case was selected for scrutiny and notice u/s. 143(2) of the Act was duly served on the assessee. Since the assessee had entered into....
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.... the perusal of the annual report, we note that the company is into business of trading of paints and varnish. We find that this company is functionally dissimilar and is directed to be excluded." 8. It is submitted by the ld AR that had the directions of the DRP, been considered the AO/TPO, then the amount of TP adjustment would have undergone change and the revised TP adjustment should have been included in the final assessment order. The ld AR submitted that the TP adjustment is retained in the final assessment order at the same figure as in the draft assessment order and therefore the final assessment order is not in accordance with the directions of the DRP and thus liable to be quashed. The ld. AR further submitted that the AO has wrongly mentioned in para 4.2 of the final assessment order that the DRP had confirmed the addition made by the TPO. In this regard, the ld. AR relied on the decision of the High Court in the case of ESPN Star Sports, Mauritius v. UOI & ANR. 9. The ld. AR also drew our attention to an order passed by the Jt.CIT, Circle 7(1)(1) dated 28.2.2022 as an order giving effect (OGE) to the DRP directions u/s. 143(3) r.w.s. 92CA r.w.s. 144C(13) of the Act w....
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....tent of TP adjustment is not in accordance with the directions of the DRP and to this extent, the TP adjustment is quashed. 13. We see merit in the contention that the jurisdictional AO has become functus officio once the final assessment order is passed and that there is no authority for him to pass any order modifying the final assessment order. We therefore hold that the order dated 28.02.2022 passed by the jurisdictional AO giving effect to the revised TP adjustment is not sustainable in law and is infructuous. This ground of the assessee is allowed. 14. Since the issue of TP adjustment is quashed on the basis that the final assessment order is not in accordance with the directions of the DRP, we are not adjudicating the rest of the grounds raised with regard to TP adjustment leaving them open. Disallowance u/s. 14A 15. During the course of proceedings, the AO noticed that the assessee has made an investment in unlisted equity for an amount of Rs.271,35,77,670 and the assessee has claimed interest expenditure of Rs.13,06,47,963. The AO therefore invoked the provisions of section 14A and made a disallowance of an amount of Rs.1,03,81,268. The DRP upheld the disallowance made....
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....has not earned any exempt income. The Hon'ble Delhi High Court in the case of Era Infrastructure (India) Ltd (supra) has considered the issue of disallowance u/s.14A when there is no exempt income and held that no disallowance under section 14A of the Act could be made if no exempt income was earned by the assessee. The relevant part of the judgment is as under:- "9. Though the judgment of this Court has been challenged and is pending adjudication before the Supreme Court, yet there is no stay of the said judgment till date. Consequently, in view of the judgments passed by the Supreme Court in Kunhayammed v. State of Kerala (2000] 113 Taxman 470/245 ITR 360 and Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association [1992] 3 SCC 1, the present appeal is dismissed being covered by the judgment passed by the learned predecessor Division Bench in IL & FS Energy Development Co. Ltd. (supra) and Cheminvest Ltd. v. CIT [2015] 61 taxmann.com 118/234 Taxman 761/378 ITR 33 (Delhi). 10. Accordingly, the appeal and application are dismissed. However, it is clarified that the order passed in the present appeal shall abide by the final decision of the Supreme Court in the ....
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....employees of the appellant. However, the respondents have urged the point before us. 10. In our view the 1999 Explanation could not apply to assessment years for the simple reason that it had not come into effect then. Prior to introducing the 1999 Explanation, the decision in CIT v. S.G. Pgnatale [(1980) 124 ITR 391 (Guj.)] was followed in 1989 by a Division Bench of the Gauhati High Court in CIT v. Goslino Mario [(2000) 241 ITR 314 (Gau.)]. It found that the 1983 Explanation had been given effect from 1-4-1979 whereas the year in question in that case was 1976-77 and said: (ITR p. 318) "[I]t is settled law that assessment has to be made with reference to the law which is in existence at the relevant time. The mere fact that the assessments in question has (sic) somehow remained pending on 1-4- 1979, cannot be cogent reason to make the Explanation applicable to the cases of the present assessees. This fortuitous circumstance cannot take away the vested rights of the assessees at hand. " 11. The reasoning of the Gauhati High Court was expressly affirmed by this Court in CIT v. Goslino Mario [(2000) 10 SCC 165 : (2000) 241 ITR 312] . These decisions are thus authorities for th....
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....9-1999 containing Explanatory Notes on the provisions of the Finance Act, 1999 insofar as it related to direct taxes. It said in paras 5.2 and 5.3. "5.2 The Act has expanded the existing Explanation which states that salary paid for services rendered in India shall be regarded as income earned in India, so as to specifically provide that any salary payable for the rest period or leave period which is both preceded and succeeded by service in India and forms part of the service contract of employment will also be regarded as income earned in India. 5.3 This amendment will take effect from 1-4-2000, and will accordingly, apply in relation to Assessment Year 2000-2001 and subsequent years". 16. The departmental understanding of the effect of the 1999 Amendment even if it were assumed not to bind the respondents under section 119 of the Act, nevertheless affords a reasonable construction of it, and there is no reason why we should not adopt it. 17. As was affirmed by this Court in Goslino Mario [(2000) 10 SCC 165 : (2000) 241 ITR 312] a cardinal principle of the tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwise prov....